New car taxes 'still need tweaking'

New car taxes 'still need tweaking'

Manufacturers want more level playing field

More refinements should be made to the new automobile tax structure to ensure greater fairness to all technologies in order to encourage more development and minimise increases in retail prices.

Toyota Camry Hybrid (left) and BMW 3 Series diesel version both emit about the same CO2 levels but the German car is not eligible for lower tax because it uses a conventional engine.

While using carbon dioxide (CO2) emissions instead of engine size has been lauded by the industry, there remain several unclear points in the new system.

One key argument is the unequal treatment of conventional engines to E85/NGV and hybrid counterparts, which enjoy a 5% and 10% advantage in three tax bands.

According to claims from manufacturers, the Toyota Camry Hybrid and BMW 3 Series diesel version emits CO2 at nearly the same level of 120 grammes per kilometre.

Another question raised is why there is no tax incentive for regular engines capable of emitting less than 100 g/km.

Subcompacts, which are not classified as eco-cars, are set to become cleaner than ever in CO2 terms without the use of electric drivetrain components.

Next year, Ford is planning to fit a one-litre EcoBoost petrol engine in the facelifted Fiesta capable of 99 g/km.

Moreover, Mazda will be able to do the same when it fits its SkyActiv technology into the all-new 2 model in less than two years.

As there is no incentive for such engines, both cars will face 30% tax without E85-compatibility.

Hybrid engines producing less than 100 g/km enjoy 10% tax and eco-cars 14% (or 12% if E85-compatible).

The shift to a CO2-based tax is certainly welcome, but it must be more technology-neutral, say product planners at BMW, Ford and Mazda.

The decision to introduce just a single 200g/km demarcation for pickup vehicles and other body derivatives will not encourage makers to develop technologies.

Several entry-level models of all pickup brands are already capable of emitting less than 200 g/km.

The Ford Ranger and Toyota Hilux Vigo, for example, have emissions levels of 192 g/km and 194 g/km, respectively, in EU markets.

"Pickup manufacturers should be encouraged by lower taxes to make cleaner engines, not be punished with higher rates on existing technologies," said one executive at a pickup player.

The source was referring to the higher rates in the new system that will inevitably increase retail prices.

Pickup trucks, especially those with extra-cab bodies, form the bulk of vehicle sales in Thailand and were renewed in their latest generations last year.

The decision to maintain maximum engine limits for both cars and pickups also contradicts efforts in doing away with rates based on engine size.

Although only applicable in high-end imports, the Lexus RX450h has an engine displacing more than 3,000cc yet produces just 145 g/km.

With the engine size limit in place, it faces 50% instead of 20% without it.

The other debate is the 10% rate for electric vehicles (EVs).

Despite no CO2 tailpipe emissions, EVs such as the Mitsubishi i-MiEV and Nissan Leaf face the same levy as the Toyota Prius, whose hybrid engine produces 89 g/km of CO2.

Starting next year, a raft of EVs will roll out globally, especially in the US and Europe, where CO2 legislation has become more stringent than ever.

"Thailand needs to come in line closer with the developed world. We may want to promote alternative fuels such as E85 and NGV, but we should also see what other countries are doing," commented one executive at a major Western car brand.

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